THE SAS will hold joint counter-terrorism exercises with Jakarta's elite
Kopassus special forces as part of a dramatic expansion of defence ties
between Australia and Indonesia.

The thaw in relations, which had been frosty in the aftermath of
Australia's post-ballot intervention in East Timor, follows a series of
unannounced visits. The chief of the Indonesian navy, Admiral Slamet
Soebijanto, was in Australia last March, and army chief General Joko Santoso
arrived last November. Head of the Indonesian air force Air Chief Marshal
Herman Prayitno is expected next month.

Senior Australian Defence Force commanders have also been to Jakarta.

In the first bilateral air exercise since 1999, the RAAF and Indonesian
Air Force (TNI-AU) will hold maritime surveillance manoeuvres this year,
although no date has been set.

The contacts underscore growing confidence in bilateral defence ties,
which appear to have weathered a diplomatic storm triggered by Canberra's
decision last year to grant sanctuary to a group of Papuan asylum-seekers.

Foreign Minister Alexander Downer and his Indonesian counterpart, Hassan
Wirajuda, last November signed the Australia-Indonesia Security Treaty and
increased co-operation between the defence forces quickly followed.

Details were confirmed this week by Indonesian ambassador Hamzah Thayeb
in an exclusive interview with The Australian.

The first joint army counter-terrorism exercises since 1997 were held
last February with another scheduled for this year.

A Defence spokeswoman said this would include counter-hijack and hostage
recovery exercises involving the SAS and Kopassus.

Kopassus gained notoriety for its support for pro-Jakarta militias and
its involvement in bloody post-ballot mayhem in East Timor in 1999.

But much has changed since, with the emergence of a common enemy - the
terrorist group Jemaah Islamiyah, whose leaders are wanted for a spate of
bombings, including those in Bali in 2002 and 2005.

These closer ties come as the government-backed Australian Strategic
Policy Institute yesterday called for the establishment of a national
institute for counter-terrorism to provide leadership and policy direction.